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Issues: Whether the unutilized credit of Education Cess and Secondary and Higher Education Cess could be cross-utilised against excise duty and service tax after the cesses were withdrawn and whether the expression "subsumed" in the Budget Speech and explanatory material created a vested right in favour of the assessees.
Analysis: The credit regime under the CENVAT Credit Rules, 2004 permitted utilisation of Education Cess credit only against Education Cess and Secondary and Higher Education Cess credit only against the corresponding cess, and cross-utilisation against excise duty or service tax was never permitted. The abolition of the cesses operated prospectively by exemption and omission, and the later provisos in Rule 3(7)(b) created only limited concessions for specified transactions on or after the notified dates. The words "subsumed" in the Budget Speech, memorandum and departmental communication could not override the actual statutory scheme or create an enforceable promise of cross-utilisation, especially when no such benefit had existed earlier. The authorities relied on the settled distinction between a substantive vested right and a mere concession, and the earlier Supreme Court decisions on lapsing of credit were held distinguishable because those cases involved withdrawal of an already accrued credit right under a different statutory setting.
Conclusion: The petitioners had no enforceable vested right to cross-utilise the accumulated cess credit, and the challenge to the impugned notification failed.
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